Is crypto mining still worth it?

In addition to buying crypto currencies, these can also be earned through mining. We have calculated once whether it is still worthwhile to mine yourself or to go to a cloud mining provider.

Crypto currencies based on the Proof-of-Work (PoW) algorithm (e.g. Bitcoin and Ethereum) still need so-called miners. Mining solves arithmetic operations, whereby new blocks are found that are attached to the block chain. In principle nothing else is done than trying to solve an arithmetic operation by using random values. How many calculations can be carried out is specified in the hash rate. The transactions that have taken place since the last block found are written to the newly found blocks. At Bitcoin, a new block is found every 10 minutes on average and at Ethereum it is currently found every 12-15 seconds.

In the following we calculate together with you whether it still makes sense to mine Ethereum or whether it is better to buy Ethereum. Instead of Ethereum we could have used Bitcoin, that result wouldn’t look much different.

Cloud Mining

The easiest way to mine yourself is to go to a cloud mining provider. There you basically do nothing else than transfer a fixed amount in advance and the cloud miner will start mining for you for a pre-determined period of time. You don’t have to worry about anything and get paid out either monthly or even daily. Sounds really tempting.

A normal offer for a cloud miner is currently 3,600 Euros for 120 MH/s. MH/s is the computing power that the miner makes available to you. So 120 MH/s are 120 million hashes (calculations) per second. For 3.600 Euro you get this performance fixed for 2 years. You have no additional costs for electricity or maintenance work. To make a profit with it, you have to earn more than 3.600 Euro (or ether in the amount of mines) with your rented miner in 2 years.

If we would switch on the Miner today, then we would earn about 225 Euro in the first month with the current difficulty in the Ethereum network. Actually not at all so badly that would mean, if it goes on like this and we make each month this yield, then we took 5,400 euro at the end. Thus clearly more than the paid 3,600 euro, that makes 1,800 euro profit and we did not even include the increase of the Ethereum course.

Unfortunately the calculation is not so simple, because the difficulty in the Ethereum network increases.

In the chart you can see how difficult it is to find a new block. On the other hand, there is all the computing power available to the Ethereum network. As the computing power (Hash Power) in the Ethereum network continues to increase, so does the difficulty. Because the time between 2 found blocks should always remain about the same. While the difficulty in January was still 2,000 TH/s, it was already 2,500 TH/s in February. In March it is already over 3,000 TH/s already. So it is getting more and more difficult to find a new block.

  • For the sake of simplicity, we assume that the difficulty in the Ethereum network continues to increase with 500 TH per month. However, this is already very conservatively calculated, because actually it is to be expected that the difficulty increases exponentially.
  • So we see that our revenue from cloud mining continues to decline within the 24 months.
  • Because our computing power remains the same (120 MH/s) but the difficulty to find a new block increases.

In total, we would only achieve a yield of 2,249 euros for cloud mining, even though we paid 3,600 euros for 2-year cloud mining. On the other hand, the Ethereum price will continue to rise in the 2 years. But then it would be better to take the 3.600 Euro and buy Ethereum immediately(!).

Result: Better not invest in cloud mining. It is always better to buy Ethereum directly and profit immediately from the price increases.

Mining by yourself

If we want to calculate whether it makes sense to mine ourselves, we first have to put together our own mining setup. Therefore we build a miner, which like the cloud miner has 120 MH/s performance.

For this we need 4 powerful graphics cards, a motherboard, CPU and a power supply. Everything together costs easily 2.500 Euro. Beyond that we have then only the electricity costs. In Germany these amount to 0.26 €/kWh without problems.

What you need is a good setup and therefore a very good VPS, you can find one listed at www.peer-server.com/vps-for-mining/.

Our hardware setup will consume at least 1,000 watts per hour. Thus one hour of mines will cost us 0.26 Euro, on the day it will be 6,24 Euro. Besides the electricity costs, we also have the costs of the mining pool, because if we would mine ourselves, then we would very rarely find a block. It is therefore better to join a mining pool, so that the income is more regular. The Mining Pool gets 1.5% of the proceeds.

In principle, we can use this to calculate what we will earn in the first month. With the current difficulty in the Ethereum network, we would earn 225 Euros in the first month. On the other hand there are 153 Euro electricity costs and 3.40 Mining Pool fees. Thus at the end 68.60 euro profit remain.

  • What we haven’t included yet are the hardware costs of 2.500 Euro.
  • With the same difficulty and the same Ethereum price, you need at least 36 months before the purchase pays off.
  • Here, too, there is the argument that the Ethereum price rises, but in return the difficulty in the Ethereum network increases.
  • You will get a better starting point if you can buy the electricity cheaper. In the USA, for example, the kWh is partly available for 0.10 Euro. In Germany, however, I have not yet found a way to achieve this.

Result

Also the own Mining is worthwhile itself in no case. Also here it is better to invest the 2.500 Euro for the hardware directly in Ethereum. With that we won’t treat the topic Mining also on cryptoscene much further, because it is not really recommendable for the end user.